Vacation homes: Build a bigger tax shelter

If you own a second home in a resort area and you’re using the place less often than before, why not turn that beach cottage or mountain cabin into a revenue producer by renting it out?

This can turn out to be a tax-efficient strategy. And if you minimize your personal use of the home, you may even qualify for a tax loss if rental expenses exceed rental income.

Your deduction potential lies in one key fact: the number of personal days you use the home compared with the number of rental days.

Specifically, your deductions will be capped at the income from your rental activity if your personal use exceeds either 14 calendar days or 10 percent of the time the home is rented out, whichever is larger. (Deductions for rental use are claimed on Schedule E, Supplemental Income or Loss.)

Tax law says that any day the rental home is used by a family member counts as a personal use day by you. That’s true even if you collect fair-marke...(register to read more)

To read the rest of this article you must first register with your email address.

Tomorrow's Training:

Your employee handbook can be an invaluable organizational tool … or an employment lawsuit waiting to happen. And in recent years, Congress and state legislatures have been busy enacting laws that directly affect your employee handbook. If you haven't kept up, you could find yourself in court....Click here to find out more.